The setting up of a new bank to cater for small and medium enterprises is essential as the mostly State owned banks are refusing to give loans.
This is the view of Labour Galway senator Lorraine Higgins who is calling for the setting of a Government working group to looking into this issue.
“Currently Irish banks are not playing their part to help stimulate the Irish economy,” she said. “Our banks’ loan rejection rate is second only to Greece in the eurozone. The lack of funds available to SMEs is strangling our economy.”
Sen Higgins says the banks currently operating in the market are retail banks and there is no “properly focused business bank”.
“We need to ensure that officials get the proper training vis-à-vis consideration of business plans so that viable business plans are approved for finance,” she said.
In Britain, a licence has been granted to a new bank called Metro Bank. This bank targets more than half of all its lending to the SME sector and commercial enterprises, and Sen Higgins says it is “exactly the type of lender that Irish SMEs need”.
“The creation of a new business focused bank will play an integral part in our recovery,” she said. “Considering that 99 per cent of Irish businesses are SMEs, it is imperative that we do all we can to help them.”